In the US, UK, and Australia, the self storage industry is a thriving market. The value of the US self storage industry in 2014, was $24 billion with 2.3 billion square feet space for lease. In 2019, the numbers would only have gone up.
In other parts of the world, Asia, for example, the self-storage market has planted its roots but is still growing.
In the beginning, the experts concluded that there were four drivers, meaning four factors that keep the industry’s wheels spinning. While three of these drivers were agreed upon by all experts (death, divorce, dislocation), the remaining one was in dispute. CBRE says the fourth one is density. Wikipedia says its downsizing, whereas the head of a self-storage facility says its disaster.
However, definitions have now expanded, and what was four became six. Now we have six drivers (Six Ds) – six factors that keep the industry alive and ensure that there is a regular demand for commercially available space.
Read on to know what these six drivers (Six Ds) are.
Death is one of the most common reasons for thinking about renting a space in a storage facility.
The belongings of the deceased have to be sorted, divided, or given away. The house of the deceased individual has to be cleaned and put on sale. In such a situation, the question of where to put their belongings arises. Most family members are in a state of grief and unable to deal with the monumental task immediately, or there is an excess of valuables that completion seems like an impossible goal. A self storage unit is a perfect answer. It allows family members the time to deal with grief, mourning, and what to do with the valuables in a manner that best fits them.
The death factor is what has led to the rise of the self-storage market in Japan. The government fears that 40% of Japan’s population will be aged 65 or older by 2060. Between 2015 and 2030, the death rate in the country is expected to increase from 4.0 to 5.8.
That is a significant number. The belongings of the people who pass away will have to stored, sorted, and cataloged. Self-storage units will be more in-demand than they ever were.
Another demand driver for self-storage is divorce.
When a couple splits up, one person usually has to move out. Divorce creates a demand to store the couple’s belongings and valuables into neutral territory, until the time they are relatively divided.
Between 2000 and 2013, the number of yearly divorces in Hong Kong increased by 68% and by 46% in Singapore. The increased number of divorces have also increased the demand for self storage units, as couples navigate the tricky terrain of being civil and split their belongings between themselves.
No metropolitan city on Earth can have a big expansive home for everyone. These cities are usually cramped, and the number of people per inch or square foot of that space is over-the-limits already.
Hence, a density problem.
The average household space per person in HK is 167 square feet, and it doesn’t come cheap. The same situation is in Tokyo and Singapore, having 329 and 247 square feet of space respectively. In the US, this space is 980 square feet.
With such small spaces assigned, people have to take the help of self storage units. Even rotating seasonal items back and forth helps enormously in making space.
Dislocation can be due to positive factors or negative factors.
Positive factors include moving to study at college or university, marriage, a job change, whereas negative factors can be eviction, getting fired from a job, etc.
Marriage creates a demand for extra space as two households merge. Moving away for tertiary education creates space demands for students as well as parents. Parents can turn their kids’ rooms into gyms, and this would create a need for space to keep the child’s stuff.
Finally, the employee turnover rates in Asia are higher than in the Western world, according to a CBRE report. 63% of employees in HK, 46% in Singapore, and 30% in Japan will change jobs after 1 or 2 years. The growing young urban population has no issues with mobility. During their transition periods, self-storage facilities can come in handy.
Given all these demand drivers, the growth of the self-storage industry in Asia is still low as compared to the increase in the Western world. The following reasons can account for this rate:
- Land tenure
- Less awareness about the existence of these facilities
- Short lease terms
- Scarcity of suitably sized properties
However, as knowledge about these facilities spreads in metropolitan cities, the industry is hopeful that self-storage units will become mainstream in no time.
Climate change has spelled a new era of disaster for all of humanity. The UN has alerted the world that we have about 12 years to prevent an irreversible climate catastrophe.
Droughts in Argentina, the cyclone Ava in Madagascar, extreme cold weather in the whole of Europe, scorching heat during the month of Ramadan in the Middle East, massive floods in Japan – all of these incidents threaten the survival of people.
When people relocate after this, they do not have homes that are ready for storing their valuables immediately. Self-storage facilities can provide the space desired to stack the remainder of people’s belongings as they set out to rebuild their lives.
Even as the consumer culture spreads rampant, the adage ‘less is more’ also catches on with equal speed.
After living in large homes with a mind-boggling amount of stuff, people look to pare down their belongings and move into a smaller house. Other reasons for downsizing could be- kids moving out for college, retirement, or the fact that a more modest home is infinitely easier to maintain.
While downsizing, however, not all of the stuff can be sold or given away in one go. Hence, while finding appropriate buyers, all of the belongings can be kept in a self-storage unit. One can move into their newer and smaller abode at the earliest convenience without worrying about where all the old stuff is going to go.
Above are the six demand drivers (six Ds)or the driving factors that keep the self-storage industry alive. Everyone undergoes one or a combination of them at some point in their lives, and taking advantage of self-storage rentals during these trying times helps to make the transition smoother.